Play The Hand You Are Dealt

“But the old capitalism, as we knew it, is giving way to a new capitalism, whether we like it or not. "The day has passed when the engine of capitalism, the financial market, will be allowed to operate more or less unimpeded by government," the provocative economist Irwin Stelzer told a lecture audience the other night at the American Enterprise Institute, a Washington think tank. He cautioned that his remarks were a "thought experiment," not a blueprint for analysis of the present economic predicament. He threw out several challenges of the status quo:

"If market capitalism is to survive the assaults of statists and populists, the former far more dangerous than the latter, we need what might be called a neo-orthodoxy - the development of new adaptations of the basic truth taught by great economists from Adam Smith to John Maynard Keynes. From these adaptations might emerge a new capitalism, the latest form of this most resilient of economic systems."

Market capitalism, Mr. Stelzer observes, must temper its "creative destruction" to be "less destructive, even if it means being less creative." One of the most difficult challenges for liberal and conservative alike is to figure out how to weigh the benefits of globalization for consumers against the costs to earners of high wages.

The underlying argument is for conservatives to pick their games carefully and, like good poker players, play the hand they're dealt, not the hand they wish they had. Capitalism can remain resilient. Paradise lost can become paradise regained.”

CommentAnother apocalypse-soon message, this time with a bit of class compared to the usual ravings from people who hear voices in the night and have a perfect master system to solve all problems, with the proviso that 7 billion people join together to implement their wonderful changes to everything.

Mr. Irwin Stelzer is an economists and his broad message has an element of plausibility in it. He calls for ‘Market capitalism’ to ‘temper its "creative destruction" to be "less destructive, even if it means being less creative." The allusion, of course, is to Joseph Shrumpeter’s beautiful expression that characterises capitalism as ‘the perennial gale of creative destruction’, a wholly laudable force that has raised living standards since our predecessors lived in forests. I am not sure how Irwin suggests we arrange to bring about the curbing of the ‘perennial gale’. Which legislature would vote that into law?

Irwin correctly describes the ‘new capitalism’ as ‘the latest form of this most resilient of economic systems’. This can be seen by observing how much capitalism has changed since Smith’s day, though some ancient elements of the old capitalism remain, such as the mercantile spirit which Smith railed against, continue in various forms across the globe. There are also different versions of capitalism in evidence in North America, Europe, Russia and, uniquely, that found in China.

I liked one paragraph in particular (it’s good advice at all times; I say the words italic often enough to my children):

“The underlying argument is for conservatives to pick their games carefully and, like good poker players, play the hand they're dealt, not the hand they wish they had. Capitalism can remain resilient. Paradise lost can become paradise regained.”

2 Comments:

DonAll sorts of people claim connections to Adam Smith - some use the same quotations as their 'evidence' - but more closely examined their claims are spurious. They don't take Smith as a whole.

Smith observed everything and did 'nothing' - he wasn't a man of system. He saw cumulative small changes in the current arrangements - mercantile political economy, which is still with us - as the best way to cope rather than the disorder that follows radical attempts to change everything.